PT Krakatau Steel Tbk, one of the strategic state-owned enterprises, initiated its public offering on 10 November 2010. Only several minutes after its opening, the price rocketed to Rp  1,270 from the initial price of Rp 850. This stopped because of the auto-rejection mechanism on the trading floor. The market capitalization reached Rp 20.03 trillion, the biggest capitalization for the IPO company. The initial price reflected severe underpricing; the price on the black market reached Rp 1,500 compared to the official Rp 850.

The allocation of the stocks was also intriguing because it was suspected that the allocation mostly favored foreign instead of domestic investors. A citizen lawsuit was opened to cancel the Krakatau Steel IPO.

This case study highlights the IPO of Krakatau Steel from the capital structure’s point of view, using EPS and EBIT curve.

PT Ciputra Development Tbk was one of the leading property companies in Indonesia. Their property projects were built in several major cities and had a well-known reputation. Two of its subsidiaries were also listed on the Stock Exchange Indonesia, PT Ciputra Surya Tbk and PT Ciputra Property Tbk.

PT Ciputra Development Tbk had total assets of Rp. 9 trillion at the end of September 2010 increased from Rp. 5.3 trillion at the end of 2005. Equity also increased from a negative Rp. 96 billion at the end of 2005 to Rp. 4.78 trillion in late September 2010. On the other hand, the company held cash and cash equivalents Rp. 2.133 trillion, bank loans Rp. 210 billion to various banks, and customer advances was Rp. 1.341 trillion in the end September 2010. The customer advances was Rp. 1.341 trillion as of end September 2010. That is, companies did a very significant progress in the last six years.

However, this was not always the case. On the severe financial crisis on 1997, the company suffered very much from huger losses, mostly because of the foreign exchange debt. The foreign currency debt reached nearly U.S. $ 200 million. With the exchange rate reached Rp 16.000 per dollar, it made the company shuffled. Payable in foreign currencies were very large and negative equity made the company should take action to survive.